07/02/2026

Leave and Leave Encashment Under The Labour Codes: Striking A Balance With The Shops & Establishments Acts

Leave and Leave Encashment Under The Labour Codes: Striking A Balance With The Shops & Establishments Acts
Insofar as leave encashment during employment is concerned, most of the Shops Acts do not provide for such facilities except in Telangana. The employers can divide the employees' leave into two buckets: the leaves availed under the Shops Act before the commencement of the OSH Code and the leaves earned by virtue of the OSH Code. Both buckets will receive different treatment as per the applicable laws.

For employees falling under the “worker” category, the leave and leave encashment-related provisions find themselves to be encapsulated under the Occupational Safety, Health and Working Conditions Code, 2020 (“OSH Code”, hereinafter). Out of all the aspects covered under the Codes, leave-related provisions are one of the few that are not, directly or indirectly, dependent upon the enforcement of Rules. While the provisions are themselves quite straightforward, the parallel existence of the State Shops & Establishments Acts (“Shops Acts”, hereinafter) is a cause of confusion in the HR circles.

ON LEAVES

As per Section 32 of the OSH Code, a worker is entitled to leave in a calendar year (starting from 1st January and ending on 31st December) if he has worked for 180 days or more in that very calendar year. It may be noted that this provision is similar to Section 79 of the Factories Act, 1948. That Section required a worker to have worked for a period of 240 days or more in a factory during a calendar year, for...

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Gaurav Kumar

is Advocate, Supreme Court of India & Editor “Labour Law Reporter”.

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Gaurav Kumar

is Advocate, Supreme Court of India & Editor “Labour Law Reporter”.

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